The stock market crash may have caused some investors to doubt whether they can make a million from buying UK shares in an ISA. They could feel that other assets provide better growth prospects, as well as less risk than the stock market.
However, low valuations even among the best UK shares means now could be an opportune moment to buy a selection of companies. By investing in a Stocks and Shares ISA, you could further improve your overall returns in the long run.
Why the best UK shares can help you to make a million
Buying the best UK shares could improve your potential to make a million in the long run due to their long-term growth prospects. The strongest companies in a given sector may be better placed to not only survive a period of weak economic growth, but to expand their market share in a rapidly-evolving period.
The most attractive UK shares could include those companies that have solid balance sheets. They may also have wide economic moats. These could be based on factors such as customer loyalty or a unique product.
Such attributes could allow them to post relatively high returns that have a more positive impact on your financial outlook than weaker stocks in the same sector. Therefore, it’s worth taking the time to identify stronger businesses that may prove to be more profitable investments when seeking to make a million.
Buying cheap UK shares
Following the market crash, many of the best UK shares trade at cheap prices. This could further enhance your potential to make a million, since they appear to offer significant scope for higher valuations and capital growth over the long run.
For example, sectors such as telecoms, banking and financial services have not yet recovered from the recent stock market decline. Some companies within those sectors are trading at price levels significantly lower than their historic averages. This suggests they could outperform the wider market over the long run.
Stocks and Shares ISA appeal
The returns available from investing in the best UK shares could be maximised through a Stocks and Shares ISA. No capital gains tax or dividend tax are due on amounts invested in an ISA. This could make it a more profitable vehicle through which to invest to make a million compared to a bog-standard sharedealing account.
Even assuming the same return as the stock market over the long run of 8% per year, a £750 monthly investment could become £1m within a 30-year period. However, by purchasing the best UK shares now while they trade at low prices, you could improve on that rate of return.
And you could reduce the amount of time it takes to build a seven-figure portfolio after the recent stock market crash.